Credit card fraud losses are declining for the first time in years, MasterCard International and Visa International report. The bank card associations attribute the declines - MasterCard's first in six years and Visa's first in 10 years - to card security features, educational efforts, and new technology.

MasterCard International, which released its 1993 fraud statistics last week, said these losses worldwide dropped 2% in 1993. to $452 million. They had risen 23% in 1992.

Diminishing Factor

Meanwhile, measured as a percentage of sales volume, fraud losses became even less of a factor.

In 1992, when MasterCard had its highest spike in fraud losses over a six.year period, fraud equaled 0. 18% of sales volume. In 1993, that dropped to 0.14%.

Visa repOrted parallel improvements.

The San Francisco-based association's worldwide fraud losses declined by 3.6%, to $655 million, in 1993, which was 0.13% of total sales. The decline followed a 26% increase the previous year.

According to MasterCard's yearend numbers, four of the five major categories of fraud declined. Counterfeiting was up by 75% in 1993.

Of the four categories - which include cards that are lost, stolen, or never received, and mail and telemarketing fraud - the never-received category experienced the greatest decline, at 25%.

MasterCard says cards never received was the fastest growing category of fraud activity m 1992. Growth in this area was stunted in 1993, largely because of card activation programs, which require cardholders to call a toll-free telephone number to activate the card.

In early 1993, cards never received accounted for $650,000 of losses each day, according to Joel Lisker, MasterCard's senior vice president of fraud.

Problem Continues

While that number dropped substantially, Mr. Lisker conceded, cards never received "are still a problem."

The industry is waging a battle against thieves who steal cards that have not been activated, and then fly to a country where it is difficult to authorize a sale electronically.

The seam artist's advantage in such a country is that sometimes only purchases costing hundreds of dollars require authorizations.

In other words, there are established floor limits in some countries that trigger authorizations, and anything below the threshold is a free ride for the thief.

Mr. Lisker expects a decline in counterfeit cards, which account for $133.8 million in losses, once security features become more pervasive.

As of January 1994, all new or reissued MasterCard cards are required to have a package of enhanced security features, such as indent printing of the the account number on the tamper-evident signature panel.

MasterCard expects the features to be on all cards by 1996, and it estimates that the enhancements will reduce counterfeit fraud by $35 million annually.

Prevention Programs

Visa's counterfeit problem started to decline in 1993, when it implemented several prevention programs, including Card Verification Value, which verifies information m a card's magnetic stripe, and Payment Service 2000, which is a riskcontrol system.

Visa reported a 7% increase in counterfeit fraud worldwide in 1993 compared with a 62% increase in 1992.

Addressing why the industry is so concerned about fraud losses, which siphon only a small portion of total sales, a Visa spokesman said: "We try very hard to make the whole experience of using a Visa card seemless .... and fraud attacks the convenience aspect of the card" because a cardholder is forced to straighten out whatever crime has occurred involving his or her card, he said.

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